Feb. 09, 2013--Driven by frequent no-vacancy weekends,
construction in Grand Forks' hotel market has been hot for a few years,
with no sign of cooling yet.

"Grand Forks has some really great weekends," said hotel
developer Norman Leslie. Occupancy rates during the week show "pretty
decent average demand, but the weekends are so over-the-top."

But as new hotels open and newer ones break ground, will Grand
Forks' busy weekends make up for slower weekdays when there are more
businesses vying for guests?

"I do feel strongly we have enough hotels," said Troy Ausmus,
who owns or manages five hotels in the market. "We've always been
extremely busy on weekends, and weekdays, they're not."

Expansion

Grand Forks has 2,118 hotel rooms, according to the Greater
Grand Forks Convention and Visitors Bureau, but that count is growing
thanks to a surge in building concentrated on 42nd Street.

Two hotels, a Hampton Inn & Suites and a Staybridge
Suites, are close to opening and will add another 194 rooms. Two other
hotels, a Sleep Inn and a SpringHill Suites, have been completed in the
past two years. And at least two new hotels, an Expressway Inn and a La
Quinta, are being planned, both in the same area.

Grand Forks' lodging tax collections for 2012 were almost 11
percent higher in 2012 than 2011, with a total of $1.072 million.

Most people look north to explain the demand for the new
businesses.

"Seven hundred thousand people live two hours north who love
to come to North Dakota," said Leslie, whose Fargo-based company has a
stake in the new Staybridge Suites next to the Alerus Center.

Changes to import duties last year, allowing Canadians to
bring home more goods tax free, gave shoppers from Manitoba and other
provinces more incentive to spend in the states, as has the continued
strength of the their dollar.

UND hockey games are a major attraction, but tournaments and
conventions are, too, said Julie Rygg of the convention and visitors
bureau.

"We host a number of youth hockey tournaments, basketball
tournaments," she said.

Occupancy rates at the end of 2012 were 71.7 percent, up 1.2
percent from the previous year, according to Rygg.

At the limit?

Ausmus said strong occupancy rates have attracted hotel
builders to the area, but he also says Grand Forks is simply getting a
piece of North Dakota's overall prosperity.

"This North Dakota market is about as good a market as there
is right now as far as the economy is going," he said.

The rapid development of the western half of the state has
brought a wave of new hotel builders to absorb some of the severe
housing shortage there.

According to North Dakota Tourism Division, 57 new hotels with
4,900 rooms have opened in the state since 2008, and 39 hotels with
3,600 rooms are under construction or development. New construction is
even happening in small towns outside the Oil Patch, such as Langdon,
Harvey and Carrington, all in the eastern half of the state.

If someone with a hotel franchise is building in one part of
the state, they are likely to look at other markets, Ausmus said.

Charles Hayes, who has built hotels in Fargo and western North
Dakota, said he has plans to start construction on a Grand Forks La
Quinta this year but has not chosen a location.

"It's going to be out by the Alerus Center, and I hope to be
doing something by late spring or early summer," he said.

Bismarck-based hotel chain Expressway Inn and Suites has also
filed plans to build a 71-room hotel at 4040 11th Ave. S., across from
the Alerus Center.

Ausmus is contributing to the proliferation of hotels, with a
new Hampton Inn and a SpringHill Suites, both on 42nd Street. But he
also worries about overdoing with new construction.

"We're not all going to survive through that, I'm afraid,"
Ausmus said. "With these two new hotels coming on line, it should more
than suffice."

Leslie, however, said area's high-occupancy weekends make the
weekdays seem worse and the overall occupancy rates are healthy. But
builders should be careful about growing too fast.

"I think it's important for the market to digest that, to
digest those rooms," he said.

While Ausmus' and Leslie's companies are already in the
market, newcomers still want a piece of the business.